Special Distinguished Commentary: Doing Well by Doing Better: Entrepreneurs and Sustainability

ABSTRACTWe examine how entrepreneurial ventures can employ sustainability to do well (create a competitive advantage) by doing better (creating more social good than is created by Corporate Social Responsibility). We compare and constrast CSR and sustainability and examine factors influencing the competitive strategies of large, established firms versus entrepreneurial firms. We conclude that established firms are likely to focus on CSR while entrepreneurial ventures are more likely to pursue sustainability as a strategy for creating private and social value and durable competitive advantage. Established firms will do well by doing good, while entrepreneurial ventures will do well by doing better.Keywords: advantages of newness, corporate social responsibility, durable competitive advantage, entrepreneurial strategy, sustainabilityINTRODUCTIONIn recent years, scholars have devoted increasing attention to sustainability as a strategy for new ventures (e.g., Binder & Belz, 2013; Hall Daneke & Lenox, 2010; Hockerts & Wustenhagen, 2010; Shepherd & Patzelt, 2011), small businesses (Nadim & Lussier, 2010), and large corporations (e.g., Hockerts & Wustenhagen, 2010; Kiron, Kruschwitz, Haanaes, Reeves, & Goh, 2013; Kiron, Kurschwitz, Reeves & Goh, 2013). In their article on sustainable entrepreneurship, Shepherd and Patzelt (2011) suggested that sustainable development is perhaps the most prominent topic of our time. Binder and Belz (2013) identified more than 30 articles on sustainable entrepreneurship that were published between 2009 and 2013.However, despite growing interest, the entrepreneurial strategy of creating durable value, both private and social, through sustainability has received little attention compared to the strategy of differentiation through corporate social responsibility (CSR) employed by established firms (Nadim & Lussier, 2010). Furthermore, while discussions of sustainability have been grounded in the literatures of environmental management and sustainable development (Dean & McMullen, 2007; McMullen, 2010; Parrish, 2010; Patzelt & Shepherd, 2011), the closely-related literature on CSR has been ignored. Therefore, we offer a detailed comparison and contrasting of sustainability and CSR and their relative abilities to create social good. By doing so, we help clarify the definition of sustainability and provide strong arguments that entrepreneurs will be more likely to pursue the strategy of sustainability, while managers of established firms will be more likely to continue to pursue the strategy of CSR.There is an exhaustive literature on how firms can do well (meaning financial performance) by doing good (meaning furthering some social goal). Much of the "good" being done by firms is a result of corporate social responsibility (CSR), a concept with a long and rich history (for an excellent review, see Carroll, 1999). We argue that entrepreneurial ventures can do well by doing better (providing sustainable solutions), and the "better" will provide more social benefit than CSR. To advance our argument we look first to the extensive literature on creating value through CSR, and how this continues to be a focus for large, established firms. We then examine the gain, measures, and shortcomings of CSR and explain why sustainability has captured increasing attention. Finally, we examine the different incentives of established firms and entrepreneurial ventures to show that established firms will, in general, continue to favor CSR, leaving vast needs for sustainable solutions to be offered by entrepreneurs. In meeting these needs, entrepreneurs can create social good and durable competitive advantage in new markets.We define social responsibility as a form of ethical self-regulation wherein businesses align their actions (e.g., use of economic and environmental resources) with the interests of their primary stakeholders, which Mitchell, Agle & Wood (1997) define as including investors/owners, customers, workers, suppliers, and their community. …